New York VLT Plan Moves Ahead

State regulators in New York have approved a plan for 11,400 video lottery terminals at eight racetracks, but also appear to have dismissed the industry's demand for more help to make alternative gaming profitable.

In a letter to racetracks the week of March 18, the state Lottery Division, which will oversee the VLT program, said tracks will be able to keep 25% of proceeds from the devices. But it remained silent on the industry's pleas for more help with expenses, such as security and capital costs.

Harness industry officials said they were still reviewing the letter. New York Racing Association chairman Barry Schwartz, a vocal critic of the funding scheme government officials approved for the VLTs, was not available for comment.

"The tracks are getting the maximum allowed by the legislation," Lottery Division spokeswoman Carolyn Hapeman said when asked about the racing industry's complaints.

The letter to the tracks said they had until April 1 to tell lottery officials if they will participate in the VLT program. The agency is rushing through a bidding process for a central computer system to run the VLTs in order to get the devices turned on by November.

Four firms submitted bids to run the computer system. Capeman declined to identify them, but said the contract will be awarded in early April. A separate bidding process will be held to find a supplier of the machines.

The VLT law sunsets in three years, which makes it difficult for racetracks to secure affordable financing to provide infrastructure for gaming operations. Tracks, under orders from the Lottery Division, submitted VLT business plans that, for the most part, show a loss over three years.

Hapeman said she had not yet heard from an account firm that was to analyze those business plans. Without the review in hand, the agency went ahead March 21 and faxed out letters telling tracks they would get 25%, and nothing more.

The VLT law, approved last October under a sweeping gambling expansion package, requires 90% be returned to players. Of the remaining 10%, 60% must go to fund education, while the Lottery Division will get 15%. The rest will go to tracks, but they must share their portion with horsemen and breeders.

One racetrack official who spoke on condition of anonymity said tracks will obviously sign on by April 1, and then still seek to improve legislative changes.

Aqueduct, operated by NYRA, will have 2,500 machines, as will Yonkers Raceway. Monticello Raceway can have 1,800, and Saratoga Equine Sports Center and Finger Lakes Race Track can each have 1,000. Vernon Downs, in its first year, can have 500, followed by 600 additional machines in the second year. Buffalo Raceway and Batavia Downs can each have 750 machines.By Tom Precious